Citi Fined for Failing to Fix Money-Laundering Controls

January 2018

A U.S. regulator said Thursday that Citigroup Inc. hasn't lived up to its promises to beef up anti-money-laundering procedures.

The Office of the Comptroller of the Currency said Citigroup's deposit-taking bank, Citibank N.A., hasn't adhered to a 2012 order that accused it of failing to fully comply with the Bank Secrecy Act. This requires financial firms to report suspicious activities and take other measures to prevent potential money laundering.

Thursday's regulatory action suggested to some lawyers that the administration of President Donald Trump, despite promises to loosen bank regulation, is drawing distinctions.

"The big question for the new administration was how they were going to categorize [anti-money-laundering] compliance," said Ross Delston, a Washington, D.C.-based attorney who specializes in the topic. "Would they view it as yet another regulatory burden left over from previous administrations, which they abhor? Or would they view it as it should be viewed, with a law enforcement and national security framework?"

The Citigroup order could signal the administration is drawing a distinction on what exactly it is willing to roll back, he added.

The original 2012 cease-and-desist order against Citigroup said the bank had inadequate internal controls and independent testing, This, the OCC said, prevented it from conducting adequate due diligence on customers in correspondent banking and retail banking. As a result, the bank failed to file some reports on suspicious activities, the regulator said at the time.

The OCC at the time ordered Citigroup to fix those problems, but it didn't fine the bank. In Thursday's statement, the OCC, which is part of the Treasury Department, didn't specify its complaints, except to say that Citigroup had "fail(ed) to complete corrective actions to address ... compliance issues as required by the order." The OCC fined the bank $70 million and left the consent order in place.

The bank neither admitted nor denied wrongdoing following the OCC's Thursday announcement or the 2012 order.

"Citi is committed to taking all necessary and appropriate steps to remedy the concerns identified by the OCC," a spokesman said. "We have made substantial investments to enhance our [anti-money-laundering] programs and we maintain a commitment to developing an industry-leading program to help to protect the integrity of the financial system."

Citigroup's laundering controls have been a regulatory concern in the past, partly because of its presence around the world, including in emerging-market countries.

The bank also has been cited by other regulators over laundering controls, and it shut down a small unit called Banamex USA after it was fined for its controls. The bank in May also settled a money-laundering investigation by the Justice Department that focused on the Banamex USA unit. Citigroup has scaled back the number of countries where it operates in recent years.